Public companies to face new financial reporting requirements

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    The Financial Accounting Standards Board has unanimously voted to introduce new disclosure requirements for U.S. publicly traded companies, The Wall Street Journal reports. These requirements aim to enhance transparency in financial reporting.

    The changes will become effective for most companies in their 2027 annual reports and 2028 quarterly reports. The changes require footnotes in income statements for items such as employee compensation, depreciation, amortization of intangible assets, and inventory purchases.

    Key aspects of the new rule include:

    • Detailed disclosure: Companies must break down employee compensation into expense categories like cost of goods sold, detailing salaries, bonuses and benefits, but without providing a total compensation figure.
    • Reporting table: A new table format will summarize required expense items—excluding selling expenses—offering more precise insights into operational costs.
    • Quarterly and annual reporting: Most disclosures are quarterly, except for annual updates on how the companies define selling expenses.
    • Possible early adoption: Companies can opt for early adoption, with final requirements expected later this year.

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